Creative Negotiation Strategies in Settlement Discussions and ADR

1.   Introduction

The best negotiation strategy to use will typically be determined on a case by case basis and generally depends the type of case, strength of your position, and personalities of the parties, attorneys, and mediator.  However, there are general principles that can be applied in nearly every case to help you get the best settlement outcome for your client.

2.  Preparation

Like most success in the legal profession, being a successful negotiator begins with preparation.  Knowing your facts, jury composition, opposing counsel, and judge are basic foundation for a successful negotiated outcome for your client.   Such preparation allows the attorney place an appropriate independent value on the case.  Formulating an independent value of the case allows you to proactively formulate a negotiation strategy to achieve results better than that estimated value.  It also allows you to set your client’s expectations appropriately.  Those that fail to prepare go into negotiations partially blind and will be at a reactive disadvantage to the other side’s position and demands.

3.  What is your BATNA?

BATNA stands for “best alternative to a negotiated agreement.”  BATNA is a concept made popular by the Fisher and Ury book, “Getting to Yes,” and it is a concept that largely determines how much leverage one has in a negotiation.  It asks you to consider the most likely outcome if the case does not settle.  That outcome could be a favorable ruling on summary judgment, or it could be a long drawn out trial that your client will likely lose.   BATNA determines the point that you walk away from negotiations because the alternative is better.

4.  Setting and managing expectations

      a.  Client

The client normally has the final say and setting appropriately expectations will greatly increase the chance of success in a negotiation.  Discussing the attorney’s independent case value, BATNA and general negotiation strategy with the client in advance will increase the client’s comfort level and help them understand when and why adjustments in settlement strategy and position need to be made.  For example, additional medical bills come to light during settlement talks or opposing counsel threatens to add a count for punitive damages if the case doesn’t settle.   Both are factors that may require adjustments of case value and BATNA if not originally considered.  While the goal of preparation is to avoid such surprises, an informed client will at least understand that such factors were not part of the original evaluation and likely be willing to adjust accordingly.

      b.  The opposing side

Setting expectations for the opposing side in advance of a negotiation at mediation can be a successful strategy in some types of cases.  Initial demands and offers to the other side prior to mediation can set the starting point and tone for the negotiation.  This is especially true if the other side has done insufficient preparation or hasn’t independently placed a value on the case.  Even if this is not the case, a pre-mediation demand or offer will inform the other side of your expectations for settlement and the basis for the same.  A detailed demand or offer letter is often one of your few opportunities to tell the other side’s client an unfiltered version of your side of the story.  Most attorneys will forward your demand letter to there client and the ethical rules require them to relay such settlement offers.  Further, this can be especially helpful when the other side’s client or decision maker is an insurance company.  This will let adjusters know if reserves might need to be adjusted or if they need to discuss additional authority with their manager in advance of the mediation.  

5.  Specific Negotiation and mediation techniques

a. Bracketing: is a commonly used technique for establishing a zone of potential agreement in mediation — an upper and lower limit between which the parties are willing to negotiate. Bracketing moves the parties closer to the true gap and makes bridging that divide seem far more attractive and possible.

You “bracket” for the parties or solicit a bracketed offer or counteroffer by suggesting that you put $X on the table if other side will agree to accept $Y in settlement. For example, if the parties are stuck at $500,000 (defendant) and $1,000,000 (plaintiff), a bracketed offer or proposal might look like this:

If the defendant will offer $600,000, would the plaintiff be willing to reduce her demand to $900,000? If the parties are willing to do so, the gap is narrowed from $500,000 to only $300,000. The parties also have broken the barrier of round numbers beyond which they’ve previously pledged not to venture.

Through bracketing, you:

·        Protect the parties from anchoring the next round of negotiations too high or too low. When the parties have some idea of the actual range in which their negotiating partners are really in, they’re far less likely to present extreme offers.

·        Test the distance between the parties’ true bottom lines without requiring them to reveal their bottom lines to each other.

·        Encourage the parties to continue negotiating. You make the gap smaller and give them hope of bridging it.

b.  Look for win/win opportunities that don’t solely involve money: Most negotiations focus only on the amount of money one party will pay to another.  Straight monetary negotiations are a zero sum game with a winner and loser.  Defendant often believes they lost when required to pay more, Plaintiff perceives loss when they get paid less than expected, and vice versa. 

However, there are often opportunities for a win/win where, as part of the settlement, the defendant gives the plaintiff something of value that costs the Defendant nothing or less than 100 cents on the dollar.  Common examples can be as simple as an 1) apology, 2) products or services that have greater value to Plaintiff than Defendant (like gift cards, airline miles, construction work, professional services, etc.), or 3) structured settlements or payment plans.  While some of these can be considered case equivalents, it can still be viewed as a win/win as the Defendant is paying less than 100 cents on the dollar.

Win/win opportunities are specific to the facts and parties of each case.  Through preparation and active listening it is up to counsel to identify when these opportunities exist.

Managing the Mass Tort Case

Managing the Mass Tort Case

Consolidation, Liaison Counsel, Electronic Service and other Helpful Tools

Introduction

Mass Tort actions present special challenges for defense counsel.  The size and complexity of most mass tort actions require special tools, techniques and procedures to effectively manage the litigation.  Defense attorneys that fail to appreciate and plan for these challenges can quickly find themselves overwhelmed and paralyzed by the sheer volume of documents and information involved.  This article will discuss the largest challenges to managing the mass tort case and the tools and practices that will help counsel navigate the complex issues involved. 

What is a “Mass Tort?”

A mass tort is a single tort that results in injury to several victims, and therefore involves numerous plaintiffs suing one or several defendants.  Mass torts are commonly confused with class actions, but these are two different and distinct types of cases.  In a mass tort action, the facts and elements of liability can be uniform among plaintiffs, but each plaintiff maintains their own individual claim resulting from their own distinct injuries and damages.  Individual trials are standard in a mass tort action unless the court has good reason to consolidate the trials.  

Conversely, the plaintiffs’ claims in a class action are typically not considered individually and there is only one trial.  The elements of both liability and damages in a class action are typically uniform and plaintiffs are only considered as a group, not individually.

In most mass tort cases the individual plaintiffs are suing the defendant(s) based on alleged harm caused by a single common product or act.  The most frequent mass tort actions involve products liability, toxic torts, and harmful drug claims.  A common example is the asbestos litigation that has been ongoing for decades.  However, mass tort actions also include disasters like the 2011 Indiana State Fair stage roof collapse.  

Initiating the Mass Tort Action

Mass tort litigation is initiated in standard fashion when a group of plaintiffs file their joint or individual complaint(s).  Plaintiffs can be represented by the same attorney(s), or separate counsel.   Very often, several separate complaints related to the same tort are filed independently in the same or different state courts.  Parties then must decide if these separate actions are appropriate to consolidate for the purposes of discovery under Ind. Trial Rule 42.  If consolidation is granted, the court with the earliest filing date will be tasked to handle most discovery and other pretrial matters.  The remaining courts of original filing have little involvement until discovery closes and the trial dates approach.  

The Benefits of Consolidating a Mass Tort Action

The advantages of consolidation can be considerable for the courts, attorneys, and the parties.  If consolidated, discovery related to the common liability claims need only be gathered once, rather than repeating the same discovery over and over across multiple cases.  The cost savings for both plaintiffs and defendants can be tremendous.  Liability experts, defendants, liability fact witnesses, etc. can be deposed once, rather than repeatedly across multiple cases.  Both plaintiffs and defendants have the ability to pool their funds and share expenses related to experts and other discovery.  This can be especially beneficial for plaintiffs who may not otherwise be able to share costs across their individual cases.  The discovery gathered in the consolidated matters can then be used across all of the individual trials.

Consolidation of the trials is also a possibility, but is normally not ripe for ruling until discovery is concluded.  Consolidation under Ind. Trial Rule 42 is obviously limited to actions pending in Indiana courts.  It is not a viable option if separate actions are pending across courts of different states.

Use of Liaison Counsel and/or a Special Master

Coming to an agreement with hundreds of attorneys on case management issues can be a daunting task.  To simplify this process, liaison counsel and/or a special master can be used to promote the efficient management of the case.

The term “liaison counsel” refers to an attorney, or small group of attorneys, nominated or elected to represent their respective group of defendants or plaintiffs in case management matters.  Often, different liaison counsel will be picked to represent a subgroup of defendants or plaintiffs on these issues.  For example, plaintiffs in a disaster case may choose certain liaison counsel to oversee the group of wrongful death claims, and different liaison counsel to oversee the group of personal injury claims.   There are no hard and fast rules for the use of liaison counsel.  Rather, parties may organize and nominate them as appropriate for administration of their specific case.

Liaison counsel are not outside legal administrators.  They have typically already appeared in the case for one or more parties they represent.  For this reason, other counsel should always be mindful of potential conflicts or situations where liaison counsel could be pursuing the interests of his or her client to the detriment of the group.  

The nature of liaison counsel’s role makes potential conflicts a relatively minor concern.  Their primary role is as a case manager on procedural issues.  They communicate with the opposing side and work with them in drafting and negotiating the terms of the case management plan, preparing master discovery requests for each side, scheduling depositions, and resolving global disputes involving discovery, experts, and even settlement matters.  Ideally, liaison counsel will regularly consult with his or her group to get a consensus on these issues and then work with opposing liaison counsel to achieve the group's preferred result.  

Liaison counsel’s role should create little or no roadblock to the interests of individual members of the group and should not impede any member’s ability to properly defend or pursue the claims relevant to their client(s).  Individual parties in the group typically have the opportunity to object to liaison counsel’s proposed positions. Court intervention is always available to resolve these disputes if pursued in a timely matter.  Liaison counsel should be used in most larger mass tort cases.

In addition, a special master can also be appointed under Ind. Trial Rule 53 to help manage pretrial matters and resolve disputes.  The trial court may appoint the special master with the consent of the Supreme Court.  The special master’s powers can be as broad or narrow as required by the particular case.  The master’s powers will be enumerated by court order and should also be referenced in the case management plan.  In a mass tort matter, a master can most effectively be used to resolve discovery disputes, amendments to the case management plan, and other routine issues similar to those handled by a magistrate at the Federal level.  This can greatly reduce the time and resources the court spends overseeing the litigation and may help speed up progression of the case.   The special master is not a necessity, but rather an additional option for managing a complex mass tort case.

Importance of the Case Management Plan

Having a court approved case management plan is a necessity to the effective management of the mass tort case.  Disputes over discovery and pretrial matters are common in mass torts due to the sheer number of parties and attorneys involved.  The trial rules alone are not adequate to resolve all disputes and going to the judge every time a dispute arises can take a tremendous toll on the court’s limited time and resources.  A well drafted and comprehensive case management plan sets clear expectations for the parties and it can resolve the majority of disputes before they even occur.

Liaison counsel will typically take the lead and work with the other side to draft a proposed plan for the comment and approval of their respective group.  Common issues addressed in the mass tort case management plan include defining liaison counsel’s role; dispute resolution procedures; protecting privilege between groups of defendants and plaintiffs; procedures for service and amending/answering complaints; powers of the special master, if any; mediation issues; protocols for pleadings and amendments, written discovery and document production (including procedures for electronic filing and service, if available); depositions protocols; expert discovery; and setting pretrial deadlines.

Parties should not be afraid to amend the case management plan as it becomes necessary.  Case management plans in mass tort cases can often be amended dozens of times to accommodate changes in circumstances, parties, deadlines, or oversights in the original plan.  

Obtaining Approval for Electronic Filing and Service in State Courts

Indiana state courts remain primarily bound to paper filing systems that only permit filing and service via U.S. mail, or fax in some situations.  These traditional filing and service methods are simply not adequate or practical to handle the volume of pleadings and discovery among the numerous plaintiffs and defendants in a mass tort action.  The problems with the traditional approach to filing and service in a mass tort case are numerous and include the obvious waste of paper, postage, time, and resources for both the law firms and the court.  In some mass tort cases with paper service, temporary staff may need to be hired and an entire room may need to be set aside to house paper copies of all pleadings and discovery.

Fortunately, advances in technology have begun to provide alternatives to traditional paper filing and service methods.  A warehouse of documents can now be stored on a 3.5 inch hard drive that will fit into a jacket pocket. 

 Electronic service (“e-service”) is permitted by order of the trial court where the action was filed or consolidated.  E-service is permitted state-wide because it only involves the method that attorneys serve pleadings and discovery to each other.  

However, the availability of electronic filing (“e-filing”) with Indiana state courts remains far more limited.  Since 2006, our state courts have had authority to pursue electronic filing programs by submitting written requests for approval of their pilot program to the Division of State Court Administration.  In 2007, the Indiana Supreme Court formalized the requirements of such a plan in the appendix to Administrative Rule 16.  These requirements were further clarified by the Supreme Court in the 2010 amendments to the rule.

Despite these efforts, only Marion County and Lake County have approved e-filing pilot programs.  From a case management perspective, this makes both counties preferred venues for mass tort actions.  The lack of participation by other counties suggests the pilot project process is too limited. This has prompted the Division of State Court Administration to recently convene a temporary advisory committee to study and recommend rules that would better enable all Indiana courts to initiate e-filing.  This is potentially a big step towards a uniform e-filing system across Indiana’s courts in the future.

In the two counties that presently support e-filing, it can only be approved on a case-by-case basis when special circumstances justify its use.  Even then, the trial court must petition the Supreme Court for permission to add the case to its e-filing docket under its previously approved plan.  

Implementing Electronic Filing and Service

Approval to use e-filing and e-service is just the first step.  Implementing these electronic methods presents additional hurdles.  Attempting e-service via an email service list is a dangerous proposition.  Especially when hundreds of attorneys are involved, and additional attorneys appear and/or withdraw on a regular basis.  Further, differing attachment limits among counsel can create additional difficulties.  A third party vendor for e-filing and e-service is typically the best solution.

LexisNexis File & Serve is a third party vendor that provides online services for managing both e-filing and e-service in mass tort cases.  It is also the only approved e-filing service for the Marion County courts.  All attorneys that appear are required to register with LexisNexis File & Serve and this service allows for easy e-service and/or e-filing with a few clicks of a mouse.  An email with a link to the served document is then instantly delivered to all by LexisNexis.  All documents served and/or filed are archived and can be easily searched and accessed at any time.  This allows counsel to better manage the thousands of documents produced, served, or filed.  While Marion County is the only Indiana venue that presently uses LexisNexis for e-filing, it can be used state-wide for e-service if approved by the trial court. 

Electronic Discovery

LexisNexis File & Serve also provides a good method for serving and responding to discovery requests electronically.  However, LexisNexis File & Serve has some limitations with larger files.  While there is technically no file size limit, LexisNexis File & Serve can often timeout when attempting to upload documents above 10 MB.  99% of pleadings and discovery fall below this file size, but for that remaining 1%, the best options are to either break up the document into smaller files or to use an online document repository.  Some court reporting services, such as Stewart Richardson, provide these document repository services.  Service of larger files can then be effectuated by having the files uploaded to the repository and notifying all counsel by letter served via LexisNexis File & Serve.  Whichever procedures are used, they should be duly outlined in the case management plan.

Despite their complex and voluminous nature, most mass tort cases can be made manageable through the proper use of technology and case management techniques. 

Mr. Pearcy is a senior associate at Hume Smith Geddes Green & Simmons, LLP in Indianapolis.  He is a member of the DTCI Trial Tactics Committee.  The opinions expressed in this article are those of the author.

This is a republication of and article Mr. Pearcy wrote for the Indiana Lawyer in June of 2013.  The original can be found by clicking HERE.

Alcohol Liability: Why you may think twice before giving your buddy a beer...

WHAT IS DRAM SHOP LIABILITY?

 
Did you know that giving a beer to a friend could bankrupt your family?  No, this was not a new super-expensive micro-brew you just gave to your friend; this is your potential liability under the Indiana Dram Shop Act.  Losing everything your family has is an extreme example for sure, but it highlights the potential risk one has when they give or sell alcohol to another person.

In its simplest terms, the Dram Shop Act imposes liability on a provider of alcohol for over-serving a drunk person.  More specifically, the provider may be civilly liable for injuries or damages caused by knowingly serving alcohol to a "visibly intoxicated" person.  The most common example of this is a bar or restaurant that serves multiple drinks to a patron and that patron injures someone while they are driving home.  The bar or restaurant will likely be sued and could be liable to the injured person.

However, the Dram Shop Act can also impose liability on individuals.  If an individual gives alcohol to a visibly intoxicated  friend at a party or social gathering, they may be liable for any damages or injuries caused by the intoxicated person.  This is called social host liability.  If the intoxicated person gets into a car accident on the way home, or falls down the stairs hitting someone in front of him, the social host could have to pay.

The Dram Shop Act was originally passed in 1986 to protect providers of alcohol.  It required that the provider must have "actual knowledge" of the person's "visible intoxication" before liability can be imposed.  However, these protections have been whittled down through the years by the Indiana courts and there are now several ways to establish intoxication.  First, are the obvious signs such as stumbling, slurring of speech, passing out, or overly aggressive behavior (to name a few).  A bartender, server, or social host that observes these signs should not serve.

Second, visible intoxication can also be supported by the provider's knowledge that the person has already consumed an excessive number of drinks.  This is why bars and restaurants will cut-off someone that starts acting intoxicated and/or has had several drinks.  Finally, visible intoxication can even be supported by the person's behavior before, during, or after being served, even if outside the view of the provider.  Expert testimony from a toxicologist can also be used to support visible intoxication.

HOW TO REDUCE THE RISK

There is no bright line test and all of these factors can be used by a plaintiff to potentially prove dram shop liability in court.  But there are things individuals can do to protect themselves:

1) Don't host parties at your home.  Go to a bar, restaurant, or another location where the alcohol is provided or purchased by someone else.  This not only protects you from dram shop liability, but it also saves you from having to clean up the mess your party guests left.
2) BYOB.  If you do host a party or gathering, have your guests bring their own alcohol and don't provide it to them.  The Dram Shop Act prohibits the providing of alcohol to an intoxicated person.  However, there is no dram shop liability for merely watching someone get drunk on their own booze, even if they do so at your home.  
3) Have enough insurance.  Most people have $100,000 or $300,000 in liability insurance through their auto or home policies.  However, a $1,000,000 umbrella policy should be considered as they are relatively affordable. Medical bills and damages from a serious accident (whether caused by alcohol or not) can often exceed the $100,000 or $300,000 policy limits.  That could leave you personally exposed for the excess.

DRAM SHOP LIABILITY FOR COLLEGE KIDS

 Even if you don't host parties, your college-aged children likely do.  Think back to all of the house and apartment parties you attended in college.  Keggers, handles of vodka, shots, drinking games, etc.  Now think about what you just read about dram shop liability.  Pretty scary, right? 

The good news is that a parent is not directly liable for the actions of the 18+ year old child (unless the parent is providing the alcohol to minors - in which case, the parent should know better).  The adult child is typically responsible, but the parents may still end up paying in the end through increased insurance premiums.  Most often, full-time college students are covered under their parents homeowners insurance for liability and property loss.  

If the child hosts a kegger at college, and just one party guest has too much and injures someone while driving home, the child will likely be sued.  The parent's homeowners carrier will then typically step in to defend the the child and may ultimately pay any settlement or judgment.  This may be reassuring to the parent, but the claim will likely increase the parent's insurance rates dramatically.

College kids should know the potential risks of hosting a party.  Parents should talk to their children about these risks so they at least know what could happen  Hopefully, the parent's advice is not lost on their teenager (as is often the case). 

Knowledge is power.  Knowing your risk is half the battle.

Christopher A. Pearcy

Senior Associate Attorney

Hume Smith Geddes Green & Simmons LLP
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595

www.humesmith.com